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Jahrestagung des Vereins für Socialpolitik 2010 (Kiel): Ökonomie der Familie >
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http://hdl.handle.net/10419/37476
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| Title: | | Optimal Incentive Contracts under Moral Hazard When the Agent is Free to Leave  |
| Authors: | | Roider, Andreas Englmaier, Florian Mühlheusser, Gerd |
| Issue Date: | | 2010 |
| Series/Report no.: | | Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Asymmetric Information and Incentives A8-V1 |
| Abstract: | | We investigate a moral hazard model with a one-sided commitment problem. That is, after effort provision, the agent is free to either stay with the principal or to leave and pursue his (ex-post) outside option, the value of which is increasing in effort. Depending on parameters, optimal contracts have interesting properties, such as first-best effort incentives, nonresponsiveness to underlying parameters, or inefficient separation. Moreover, the agent might suffer from a ceteris paribus improvement of his outside option. Potential applications of this framework include employment relationships and venture capital financing. |
| Subjects: | | moral hazard limited commitment ex-post outside option limited liability |
| JEL: | | D82 K31 M52 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | Jahrestagung des Vereins für Socialpolitik 2010 (Kiel): Ökonomie der Familie
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